CLA-2 CO: R:C:V W555318 DBI
S. Richard Shostak, Esq.
Stein, Shostak, Shostak and O'Hara 1101 17th Street, N.W., Suite 806
Washington, D.C. 20036-4704
RE: Applicability of subheadings 9801.00.10 and 9802.00.50, HTSUS, to textile products laundered in Mexico
Dear Mr. Shostak:
This is in response to your letter dated March 1, 1989, on behalf of Sanitex, Inc., requesting a ruling concerning the applicability of subheadings 9801.00.10 and 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), to textile products to be laundered in Mexico and returned to the
U.S. You also ask whether the returned textile products will be subject to textile quota restrictions and visa requirements.
FACTS:
You advise that textile articles owned by commercial establishments and soiled in the U.S. will be sent to Mexico for laundering. The textile products, which are all of U.S. origin, consist of sheets, pillowcases, tablecloths, napkins and lab coats. The laundering process will include only washing, drying and, in some instances, pressing of the products in Mexico. The products will then be returned to the U.S. for repetitive use and subsequent relaundering in Mexico.
ISSUE:
Whether the described textile products, when returned to the U.S., will be eligible for the exemption from duty in subheading 9801.00.10, HTSUS, or the partial exemption from duty in subheading 9802.00.50, HTSUS.
LAW AND ANALYSIS:
Subheading 9801.00.10, HTSUS, provides for the free entry of articles of U.S. origin which are exported and returned without having been advanced in value or improved in condition while abroad.
You cite T.D. 56153(1), which is an abstract of a ruling letter dated February 27, 1964, to support your position that the laundering is not an operation which advances the value of the merchandise or improves its condition, but rather, a process which restores the textile products to their clean condition prior to use. In that case, jute bags of U.S.-origin, containing rice, were shipped to Canada where they were emptied, cleaned and mended. We held that the returned bags had not been advanced in value or improved in condition, and, therefore, were entitled to free entry under item 800.00, TSUS. We reasoned that the operations of cleaning and mending the bags constituted a restoration of the bags to the condition in which they left the
U.S. and not an advancement in value or improvement in condition within the meaning of item 800.00, TSUS.
The facts in the present case are distinguishable from those in T.D. 56153(1). In the prior case, the jute bags were restored to the clean and untorn condition in which they left the
U.S. In the present case, the cleaning of the textile products does not restore them to the condition in which they left the
U.S. since they were soiled when shipped to Mexico.
It is clear in the instant case that the foreign laundering process, consisting of washing, drying and, some instances, pressing, improves the condition of the soiled textile products that are exported to Mexico. As a result of being improved in condition in Mexico, the returned textile products will not be entitled to free entry as American goods returned under subheading 9801.00.10, HTSUS.
Subheading 9802.00.50, HTSUS, provides for the assessment of duty on the value of repairs or alterations performed on articles returned to the U.S. after having been exported for that purpose. However, the application of this tariff provision is precluded in circumstances where the operations performed abroad destroy the identity of the articles or create new or commercially different articles. See A.F. Burstrorn v. United States, 44 CCPA 27, C.A.D. 631 (1957); Guardian Industries Corporation v. United States, 3 CIT 9 (1982). Treatment under subheading 9802.00.50, HTSUS, is also precluded where the
exported articles are incomplete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles. Dolliff and Company, Inc. v. United States, 66 CCPA 77, C.A.D. 1225, 599 F.2d
1015 (1979).
We have previously held in a ruling dated May 11, 1989 (HQ 221046), copy enclosed, that the cleaning and sanitizing of soiled U.S. linens in a Mexican laundry facility qualify as an alteration as that term is used in subheading 9802.00.50, HTSUS. We further stated in ruling 221046 that, as the returned linens are considered foreign articles pursuant to section 12.130(c), Customs Regulations (19 CFR 12.130(c)), and U.S. Note 2, subchapter II, Chapter 98, HTSUS, they would be subject to applicable visa requirements and quota restrictions.
Consistent with ruling 221046, we find that the laundering operations in the present case may be considered an alteration, thereby entitling the returned textile products to the partial exemption from duty in subheading 9802.00.50, HTSUS. However, the textile products will be subject to all applicable visa requirements and quota restrictions as products of Mexico.
HOLDING:
On the basis of the information submitted, we conclude that the foreign laundering process improves the condition of the textile products. Therefore, they are not entitled to free entry as American goods returned under subheading 9801.00.10, HTSUS. However, the returned textile products are eligible for the partial duty exemption under subheading 9802.00.50, HTSUS. Compliance with all applicable visa and quota requirements is required upon return of the textile products.
Sincerely,
John Durant, Director
Commercial Rulings Division
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